COMPILED BY NEESA MOODLEY
Tax-free unit trust
As of tomorrow, investors will be able to invest in the Allan Gray Tax-Free Balanced Fund. The new fund allows investors to take advantage of the tax-freeinvestment legislation that came into effect in March 2015, which was introduced by Treasury to encourage South Africans to save.
The Allan Gray Tax-Free Balanced Fund will have the same mandate and objectives as Allan Gray’s Balanced Fund and will be managed in a broadly similar way, but will charge a fixed fee instead of a performance-based fee, to comply with legislation governing tax-free savings and investment products.
Allan Gray says the total expense ratio of the fund will be about 1.57%, including all investment management fees, trading costs, administration fees and VAT. This, however, does not include financial adviser fees – if they are applicable.
Richard Carter, head of product development at Allan Gray, says: “Our research indicates that using a tax-free investment account will generate meaningful value compared with a basic unit trust investment over the very long term. The potential after 15 years could be as much as an extra 30%, driven by the value of compounding all gains tax-free.”
Net wealth decreases
The value of South Africans’ net household wealth decreased at an annualised pace of 4.5% during the third quarter of last year.
The Momentum Unisa Wealth Report for the period reflects that the consequence of this decline is that households – which already had to lower their lifestyle – will have to continue with this process.
Moreover, they will have to lower their future lifestyle expectations and review their saving and retirement targets, as well as adjust their other saving and investment goals.
The reason for the decline in the value of household net wealth can be attributed to a strong decrease in the value of household assets, while liabilities increased moderately.
According to the survey, about 74% of household debt can be attributed to mortgages and vehicle finance, but only 33% of these instalments is used to repay secured debt.
Conversely, although unsecured debt (credit and store cards, and personal and microloans) comprises only 26% of all debt, about 66% of all instalments go towards repaying the unsecured debt.
Rogue adviser to pay up
Financial Advisory and Intermediary Services Ombud Noluntu Bam recently ordered that Investiplan and Hermann Waschefort were liable for the payment of R500 000 to disgruntled investor Elizabeth van Schalkwyk.
Van Schalkwyk sold her house for a profit of R500 000 in February 2011. She asked Waschefort to invest the money on her behalf and stated that she needed to draw down R4 000 a month and wanted the rest of the interest to be funnelled back into her investment.
She was told the money was invested in the Investiplan Private Equity Fund. However, the promised return of 9.6% a year did not materialise and Van Schalkwyk lost her money.
In her ruling, Bam found Waschefort and Investiplan failed to explain what happened to the company and the client’s funds. Bam also ordered Waschefort and Investiplan to pay interest of 9% a year from May 28 2012 to the date of payment.
When you use a financial adviser, you need to check that he or she is qualified to advise you. The adviser should also regularly provide you with written records of your investments.
Emotions and finance
Human behaviour specialist Mavis Ureke will be launching her book, Managing Emotions for Financial Freedom: The Invisible Forces Driving your Money Habits, on Saturday at the Protea Hotel Wanderers, Johannesburg.
This is a free event with guest speakers joining Ureke to talk about finances and emotions.
To book a place at the event, email firstname.lastname@example.org, or call 011 326 2499.
To order the book, go to mavisureke.com.